The Impact of Mineral Global Value Chains on Sectoral Value-Added Growth

Abstract

While there is a burgeoning body of literature investigating the economic implications of participation in GVCs on growth and other key macroeconomic indicators, there remains a paucity of studies that specifically explore how natural resources interact within the context of GVCs in both developing and developed countries. This paper seeks to address the current gap by conducting an investigation into the impact of resource-based GVC participation, specifically for the industries of fuels and minerals, on the growth of value-added. Utilizing a unique dataset that spans the period from 1990 to 2016 and contains 133 countries, we employ the fixed effects method to capture unobserved individual heterogeneity. Our empirical findings reveal that, for our full sample, mineral (fuels) backward (forward) GVC participation has a positive and significant impact on the growth of the industry. Also, forward GVC participation exerts a favorable influence on value-added growth in the fuels and minerals sectors in developed countries. Finally, participating in minerals backward participation favors the mineral value-added growth in only developing countries.